Mr Hollingworth had been under intense pressure over recent weeks following allegations he raped a woman 40 years ago, a claim dismissed last week by a court.

Mr Howard told parliament that Peter Hollingworth had dedicated his life to the service of the less fortunate and under-privileged.

But, he said, Mr Hollingworth had committed "a grave error of judgement" in failing to dismiss a paedophile priest while he was Anglican Archbishop of Brisbane.

"He has paid an extremely high price for that," said Mr Howard.

His decision to resign was correct, said Mr Howard, and one that put the dignity and strength of the office of governor-general above his own needs.

Opposition Labor leader Simon Crean condemned the prime minister for the delay in dealing with the issue.

"This was a person in authority... and he failed to act. He was guilty of moral turpitude," Mr Crean told parliament.

Republican cause

The affair has led to calls for reform of the way the governor-general is selected and held accountable once in office.

It is the biggest scandal in the 102-year-old office of governor-general since 1975, when incumbent Sir John Kerr dismissed a Labor government that had failed to win parliamentary approval for public spending.

The dismissal of a government by any future governor-general is thought highly unlikely, with the position now seen as largely ceremonial.

The controversy has reinvigorated republicans who want to replace the Queen with an Australian president, but their cause is seen as having little chance of success under Mr Howard, a staunch monarchist.